GungHo Online Entertainment, Inc. Just Missed EPS By 56%: Here's What Analysts Think Will Happen Next

The analysts might have been a bit too bullish on GungHo Online Entertainment, Inc. (TSE:3765), given that the company fell short of expectations when it released its third-quarter results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at JP¥23b, statutory earnings missed forecasts by an incredible 56%, coming in at just JP¥26.77 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for GungHo Online Entertainment

Following the latest results, GungHo Online Entertainment's three analysts are now forecasting revenues of JP¥107.3b in 2025. This would be an okay 3.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to fall 12% to JP¥197 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥109.3b and earnings per share (EPS) of JP¥209 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥3,067, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic GungHo Online Entertainment analyst has a price target of JP¥3,400 per share, while the most pessimistic values it at JP¥2,600. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting GungHo Online Entertainment is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that GungHo Online Entertainment's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.5% growth on an annualised basis. This is compared to a historical growth rate of 4.6% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that GungHo Online Entertainment is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at JP¥3,067, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for GungHo Online Entertainment going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for GungHo Online Entertainment you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.